Cost of living adjustments, which began in 1975, are implemented in order to counteract the effects of inflation. However, some senior advocacy groups have expressed concerns that costs have risen faster than inflation throughout recent years.
The Social Security Administration uses a formula to determine what the COLA will be each year. It is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, which are calculated on a monthly basis by the Bureau of Labor Statistics. Benefits will increase if there is a measurable increase in the index year over year.
As previously reported by FOX Business, the Social Security Administration announced in October that benefits would increase by 1.6 percent in 2020. For a recipient earning $1,479, the average monthly benefit among all retired workers, checks will increase to about $1,503 per month.
The cost of living adjustment for 2018 was 2 percent, but it was largely perceived to be offset by increases in Medicare costs.
There was a 0.3 percent increase in 2017 and no adjustment in 2016.
According to a report from the Senior Citizen’s League, Social Security benefits have lost 33 percent of their buying power since 2000.
Bolstering the program has become a focus on Capitol Hill as 10,000 baby boomers turn age 65 each day in the U.S. and funding is running low.
Social Security’s reserve funds are expected to be depleted in 2035, at which time the program will no longer be able to pay out benefits in full.